Despite summer temperatures in the 90s, thoughts of last year’s cold, costly winter continue to creep into the minds of Alabama poultry farmers.
“Some experts described the propane shortage that peaked in January as a perfect storm,” said Alabama Farmers Federation Poultry Division Director Guy Hall. “It may take some farmers more than a year to recover from the financial losses caused by high propane prices.”
Propane exports jumped dramatically in recent years, up 277 percent from 2010 to 2013, according to the U.S. Energy Information Administration.
“Last fall, the U.S. had its largest, wettest and latest corn crop in history,” Hall said. “About the same time, some pipelines were converted from propane to other materials, and a major pipeline shut down for repairs. When a series of winter storms struck several areas of the country, propane demand skyrocketed.”
Propane prices for Alabama farmers jumped from about $1.60 a gallon to nearly $3.60 a gallon in January.
Poultry farmers use a lot of propane when it’s cold – as much as 100 gallons a day per house when chicks are small. A typical residence generally uses less than 1,000 gallons a year.
Alabama Farmers Federation State Poultry Committee First Vice President Dennis Maze converted five of his eight broiler houses to natural gas about the time the crisis hit. He’s converted the other three since.
“After the price and supply issues we had last winter, I feel a lot better about my farm being on natural gas,” Maze said. “What concerns me is the number of poultry farmers we have who don’t have access to natural gas. If we have another bad winter, it could put some of them out of business. Our profit margins are already so small, we can’t afford those kinds of gas bills.”
Maze said natural gas is cheaper and provides a steady heat source.
For Jan Woodham of Dale County, a State Poultry Committee member, natural gas isn’t an option. Existing gas lines are too far away. Last winter, when her normal supplier ran out of gas, she had to buy elsewhere, and the price spiked from $1.23 to $3.60 per gallon.
“We had three-day-old chicks last winter and were running out of gas,” she said. “We hit the panic button. When I finally got gas, it cost me $16,000 for one batch of birds in my seven houses.”
Todd Lawrence, a propane expert with the Alabama Farmers Cooperative, said while it’s hard to predict supply and demand, he believes summer prices won’t be significantly lower like in the past. He also recommends farmers increase communications with their supplier.
“One problem is prices on contracts are higher than they were last year and some farmers may resist, thinking it will go lower,” Lawrence said. “However, if they paid some of the super high prices (last winter), they may think it is a bargain. I would caution farmers to make sure they talk to their propane supplier about storage, delivery options and contingency plans. It’s important to remember that price is not everything. Farmers need to reward those companies that took care of them this past year.”
That’s exactly what Woodham plans to do.
“I’ve already changed companies,” she said. “My old company is taking orders and filling tanks again, but I couldn’t take a chance with a company I can’t depend on.”
Poultry and egg production and processing have a $15.1 billion impact on Alabama’s economy. The industry employs 86,237 people in the state.